US investment bank Citi has launched its first sustainability-linked supply chain finance (SSCF) programme in Asia-Pacific.
In a company statement, Citi said that supply chain finance can benefit both companies and their suppliers as they prioritise working capital positions.
When using supply chain finance, for example, Citi could provide financing to a client’s suppliers from the date of the collection of specific goods, or the date of the provision of specific services, to the date on which payment is owed to those suppliers.
The cost of such financing is then borne by suppliers at a rate lower than their usual cost of funds, and as a result, suppliers benefit from cash flow acceleration, quicker payment, and improved financing costs.
Citi’s first SSCF programme has been implemented for German chemical and consumer goods company Henkel.
The programme was first launched with suppliers in Australia, and will be expanded to include suppliers in additional markets over the coming weeks.
The programme is also a first for Henkel in Asia-Pacific, and is targeted at existing or new suppliers who demonstrate strong or improving sustainability performance.
Qualifying suppliers can access Citi’s supply chain financing at preferential rates on a tiered basis, with rates improving as a supplier’s sustainability score improves.
Henkel, with the support of an unnamed, global sustainability assessment agency, will assess the sustainability performance of suppliers.
Christoph Wenner, regional head of finance for Asia-Pacific at Henkel, said: “We are convinced that sustainability-linked supply chain financing can help improve sustainability across Henkel’s large supplier ecosystem in Asia-Pacific.”
Citi also said its SSCF programme in Asia-Pacific aligns with its own ESG commitments.
To help accelerate the transition to a global low-carbon economy, Citi launched its updated Sustainable Progress Strategy in July last year, which includes a global $500 billion Environmental Finance Goal.
Citi has also established a commitment to deliver $1 trillion in sustainable finance, and a $500-billion Social Finance Goal.
Ernesto Pittaluga, head of corporate, commercial, and public sector sales for Treasury and Trade Solutions in Asia-Pacific at Citi, said: “Like Henkel, our ESG commitments are an essential part of our firm’s strategy, and these commitments are deeply integrated into our business and long-term priorities.
“We are committed to introducing new and innovative ESG-linked solutions for our clients in Asia-Pacific, and look forward to expanding the use of our SSCF program in the region.”
With business in over 160 countries and jurisdictions, Citi has approximately 200 million customer accounts worldwide, servicing consumers, corporations, governments, and institutions.
Its range of financial products and services includes consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.
Citi’s Treasury and Trade Solutions (TTS) offers a suite of cash management and trade finance services, and is used by multinational corporations, financial institutions, and public sector organisations in over 90 countries worldwide.